Registered Education Savings Plan (RESP)
For parents who wish to save money for their child’s post-high school education, RESP is a unique savings account. We want to do everything in our power for our family, including considering their schooling. High school is a basic need for starting an academic career, even though attending post-secondary education is no longer as popular as it was fifty years ago. The excellent news is that this has led to significantly better long-term financial outcomes for Canadians. Check this also thomas c chan life insurance
What is the cost of post-education in Canada?
Do you know how much it will cost to send your children to college or university in Canada? An average local post-secondary institution will cost between $11,000 and $21,000 annually, according to Statistics Canada. Given that it takes four years on average to finish a degree, the current cost of tuition alone should come to at least $40,000. You’ll be looking at much more than that when you include textbooks, rent, meal expenses, transportation, and more courses.
Your child will either have to work part-time, take out an education loan, and graduate with a lot of debt, or the parents will pay the fees. According to the Canadian Student Loan Program, it takes the majority of students ten years to pay off their student loans, and the Canadian Federation of Students believes that an average student’s debt now is over $28,000. A student will not be making any significant purchases, like buying his first home, until he is 32 years old or older if he finishes college at age 22 with student loans.
Types of RESP
- Personal Plan
Although the individual RESP only has one recipient, anybody can open one, including grandparents, family members like aunts and uncles, or friends who wish to contribute to the plan. Since you can see the amount you have given over time and how much you have withheld while your kid is in post-secondary, it is the simplest option.
- The Family Plan
As its name suggests, it permits more than one beneficiary to be listed on the account, provided that they are connected by blood or adoption. For people who have more than one child, this plan is ideal since it allows you to maintain only one plan rather than several programs for each child. Unless you specify differently, the beneficiaries receive an equal share of the payments. One child’s share may be fully transferred to the other plan recipients if they later choose not to continue their education.
- Group Plan
Group RESPs are exclusively provided by scholarship plan dealers, who combine the funds of all plan participants and invest in fixed-income securities. It usually offers a consistent, low-risk return. One advantage of a group plan is that, compared to a person who might be investing a certain amount in their account, the huge pool of cash invested at a fixed income provides a better return.
